Too often we hear that owners and operators are unhappy with their aviation hull and liability insurance premiums. You trust your current broker to obtain the best rates, but are they doing everything they can to advocate for you in the insurance market and providing you with the transparency you need to make a critical decision? We outline the renewal process, the role the broker plays, and how you can influence the results in this difficult market.

Approximately six months before your policy expires, your broker should provide an insurance market update (especially in this dynamic cycle) to prepare your expectations and plan to avoid any unwanted surprises. Your broker should also review your coverage, limits deductibles, and consider making adjustments to protect the operation. The strategy to market your business is an important decision that needs to be carefully evaluated on an annual basis. Shopping your business to all the insurers every year, searching for the cheapest deal is not advised. Instead, you should focus on building relationships, continuing discussions with a select group of interested insurers whom are familiar with your operation, both to preserve your reputation and not waste anyone’s time, namely yours. Differentiating your company, highlighting operational excellence, claims history (good, or if bad, then what has changed to mitigate recurrence), and a top down commitment towards a culture of a safety is a better approach to obtain long term pricing stability. After all, no one is more familiar with the operation than you, so it is your duty to provide the broker with this detailed information for underwriting consideration.

Once the renewal plan is agreed upon between the parties and the relevant renewal exposure information is gathered, the broker’s responsibility is to execute the strategy. This doesn’t mean your broker makes one phone call to an underwriter who declined to quote last year. There needs to be a diligent effort on behalf of the broker. Understanding how underwriting perceives your company, concentrating on their questions/concerns, creating new insurer interest, working to negotiate the best terms and conditions and showcasing your operation in the best possible way; demonstrating your safety, maintenance, training, and hiring procedures. It goes without saying that brokers should have a relationship with their underwriters, but operators should too. That could require in-person meetings if necessary. Broking is an art that requires finesse not simply beating down the insurers for the cheapest price.

When the quotes come back, ideally thirty days before policy expiration, the broker has a responsibility to disclose all options to you. Waiting until the final days before the policy expires to present the renewal results is unacceptable under any circumstance. No one wants to be forced to make a decision without considering all their options and that takes time to analyze especially for a major expense item for the aircraft like aviation hull and liability insurance. If there are no other options to evaluate other than your incumbent provider, is your broker stuck in their ways and unable to creatively structure the amount of risk you take or preemptively increasing it to gain more control over pricing? There is value in staying with your incumbent insurer, barring any major variations with their coverage or pricing, to accrue experience and premium in case you need that leverage at some point. At the same time, it is important to begin building backup relationships in case anything should change.

Most brokers are transparent in how they are compensated. They usually earn a percentage of the premium, typically 15% for aviation hull and liability, although some of the big brokers have negotiated higher percentages based on the volume of business they placed with each insurer. But in the event your premium went up this year, should your broker be compensated more for doing the same job? Unfortunately, the commission arrangement can present a conflict of interest: the broker is evaluated based on their performance and that usually means the cheapest price, which comes with a reduction in their remuneration. Brokers often try and promote their claims, legal, actuarial and loss control services at additional costs to you or as part of justifying increased compensation. But remember there are expert third-party providers of these same risk management services that can be contracted on an ad hoc basis, often at the expense of your insurer. Be vigilant in understanding the value of all your options.

While aviation insurance is a niche specialty, you need a broker you can trust with the expertise to service and assess your operation beyond the obvious Hull and Liability exposures. The value of a relationship with your broker should not be discounted, but the partnership and experience you have established with your insurer will prevail when there is an adverse claim or market cycle.

Want to learn more about the aviation insurance process and best practices? AVIAA will be in Las Vegas this month at NBAA BACE. Visit us in booth N3138 or schedule a meeting with our Insurance experts at